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Texas brewers group forms a PAC to change state’s ‘broken’ beer laws

Tom McCarthy Jr.
The people behind breweries such as Austin Beerworks say they hope the recently launched CraftPAC will help them advance their legislative goals in the state. TOM MCCARTHY JR./FORAMERICAN-STATESMAN

Posted: 4:51 p.m. Monday, January 22, 2018

The Texas Craft Brewers Guild on Monday announced the launch of a political action committee, a sign the state’s craft brewing industry is maturing.

The Texas Craft Brewers Guild’s CraftPAC will use monetary contributions from brewers and consumers to support legislation, legislative candidates and other political initiatives they say will benefit the industry’s continued growth.

The new CraftPAC is in response to recent bills that one of the state’s most influential lobbying groups — wholesale beer distributors — pushed through, such as last year’s House Bill 3287, now a law prohibiting taprooms in breweries that grow beyond a certain size or become owned by a larger beer company. Texas brewers largely opposed it.

CraftPAC is also a means for Texas brewers to gain rights that breweries in the country’s 49 other states already have, such as to-go beer sales at brewery taprooms, Austin Beerworks co-founder Adam DeBower said. He’s a director on the board of the guild and now board chairman for CraftPAC.

The PAC “is a way that we can raise money not just from the craft brewers in the state of Texas but also the fans, the craft beer fans,” he said. “Get them engaged, get them involved, in seeing real legislative change. Quite frankly, the beer laws in Texas are broken, and we need to fix them. The three-tier system itself is broken. We need to fix it. We don’t want to get rid of it; we want to upgrade it.”

In the three-tier system, breweries make beer, distributors sell that beer to retailers, and retailers then sell it to the public. None of those groups can veer into another’s business, to prevent a monopoly on any level. The alcohol regulations were established in the 1930s, after the repeal of Prohibition.

DeBower and Charles Vallhonrat, executive director of the Texas Craft Brewers Guild, say a craft brewery-focused PAC is needed because Texas is the only state in the U.S. that doesn’t allow its breweries to sell beer directly to consumers to drink off-site, and Texas ranks 46th in breweries per capita (at 1.1 for each 100,000 adults 21 and older).

“Texas has a huge population but such a small number of breweries,” DeBower said.

California, which has a larger population (39.25 million compared with Texas’ 27.86 million, according to the U.S. Census Bureau), has about three times the number of breweries — almost 630 breweries to Texas’ more than 250 — putting it at 2.2 breweries per 100,000 adults 21 and older, according to data from the Brewers Association, a national organization representing the country’s craft brewers. California has a brewers PAC, as do New Jersey, Michigan, Colorado and other U.S. states, Vallhonrat said.

“To them, it’s just a natural thing to do,” he said.

All states but Texas allow manufacturing breweries to sell beer to go in their taprooms. Texas’ wineries, distilleries and brewpubs also may sell their products on-site for off-site consumption. As a result, many manufacturing breweries — Austin’s Hops & Grain most recently — have switched to brewpub licenses, a designation that limits how much beer they can make.

Trade groups such as the Beer Alliance of Texas and Wholesale Beer Distributors of Texas say allowing taproom sales for off-site consumption would be a violation of the three-tier system.

“Our members continue to support the long established, very workable three-tier regulatory system in Texas. We will continue to dialogue with all beverage stakeholders, as we always have, including the craft brewers, as lawmakers update and refresh public policies,” Rick Donley, president of the Beer Alliance of Texas, said Monday.

The three-tier system “has allowed for an incredibly competitive marketplace and allows small breweries to thrive in a way that other commodities can’t do because of the inability to get to market without a distribution tier,” Keith Strama, counsel for the Wholesale Beer Distributors of Texas, said during testimony last year for HB 3287.

During the last legislative session, the Texas Craft Brewers Guild had intended to push for Senate Bill 1217, which would have allowed the to-go taproom sales.

Instead, the guild focused on fighting HB 3287. It dictates that breweries making 225,000 barrels or more of beer per year — which at this time is only Austin’s Oskar Blues facility — must sell any beer designated for their on-site taprooms to their distributor and buy it back. The beer doesn’t leave the facility. Opponents of the bill, including the guild, called this payment an “extortion fee” and a “dock bump tax.”

To fight for a gubernatorial veto of HB 3287, the Texas Craft Brewers Guild created an online petition that generated “about 15,000 signatures in a 48-hour period,” DeBower said.

Though it didn’t succeed, the petition demonstrated to Texas brewers that they have a base of supporters who want to help their cause and might be willing to donate money.

“Through social media and word of mouth was how that got out,” DeBower said of the petition. “Our aspiration here is that we can build on that. Get this idea in front of craft beer fans and get a few dollars. We will never have the money our opposition has, and nor do we want to have it. But we still have to spend the money and play the game.”

According to an analysis by the Texas Tribune, “booze industry players gave more than $11 million to state campaigns over the past four years, about three-quarters of which came from beer distribution interests.”

CraftPAC will start giving money as well, launching just in time for state primary elections March 6, Vallhonrat said.

“One of our greatest assets is our fan base,” he said. “The public outpouring from the petition was fantastic, and we need to build on that type of effort.”

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